Indian markets have surrendered to their global counterparts and dance to their tunes. And this trend is likely to continue given the lack of triggers at home. Tuesday’s market move only confirms this view.
The benchmark indices wobbled in early trading as Asian market sentiment remained tepid. However, the recovery set in just as quickly when European peers and US futures signaled strength. BSE Sensex managed to retake the 59,000 mark when it racked up 514 points. Meanwhile, Nifty50 closed the trade at 17,562 on Tuesday, up 165 points.
That’s not it! The bulls have begun to see a silver lining for India amid the Chinese crisis, which is putting other Asian competitors in a bear crisis. They believe the Chinese crackdown before and the Evergrande crisis now bode well for India as it can facilitate the flow of capital.
However, the next few days will be a test for the markets.
The Fed’s monetary policy meeting would end later today and should provide guidance on the timeline for the tightening. And Evergrande is due to make its bond coupon payments on Thursday.
Will the tapering be free of tantrums this time around?
According to a Bloomberg poll of economists, the Federal Reserve will hint at its meeting that it will cut back on monthly security purchases and make a formal announcement in November. They expect the Fed to keep rates close to zero through 2022.
Bloomberg
- Two-thirds of economists expect an announcement to buy bonds at the November 2-3 meeting
- Over 50% expect tapering to begin in December (earlier than estimated in July survey)
However, Dankse Bank analysts believe the pace of tapering will matter more than time. They also expect the Fed to wait a little longer before giving details on the tapering
Danske Bank
- We assume that the Fed will wait a little longer before giving details on the tapering.
- The tapering pace will be more important than the exact timing
- We assume that the Fed will signal a rate hike (from zero) in the updated projections next year
The promotion in the primary market would be worth checking out though, as Paras Defense and Space Technologies’ issue of Rs 171 crore opens today on the second day of subscription. The IPO went through on day 1 within minutes. By the end of the day, he had received over 16.5 times the bids, with the retail quota drawing the most.
Finally, stock-specific news flows, FII movements and oil prices could also influence market movements.
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